I'll be honest, I did not read the entire original post, and I did not read any of the responses so if what I'm about to say has already been said... well, sorry.
Retake the LSAT. For non-trads, the LSAT definitely outweighs GPA. I say this from my own experience.
Here's the quick stats for others like me who don't want to read the whole post: 2.85 UG GPA, LSAT (Feb 08)= 157, LSAT (June 08) = 162
Although not to the same extent as you, I am also quite a few years removed from school. What you are doing right now is almost exactly where I was one year ago. I studied during the month of January and took the early Feb LSAT, debating whether to jump into the application ring so late in the game. I'm a married female who wants to start a family, so each year that school takes is a year in waiting to start a family - obviously starting early was very important to me. I scored a very disappointing 157 (I was devastated). I knew I had the potential to do much better than that. Add into it that applying so late in the game to schools not only limits where you can potentially get in, but also wipes out almost any chance of getting scholarship monies, and I begrudingly decided to re-take the LSAT and apply early in the cycle this year for the best opportunity for acceptances and scholarship.
The extra time with the LSAT paid off. Practice test scores were in the mid to high 160's (so I, unfortunately, was absolutely distraught when I got my 162 score - but I digress). I did not get my applications out early like intended, but with December/January apps and the better LSAT, I've been accepted to multiple top 100 schools, all with nice scholarships.
And the person who told you 1 year out and the school no longer matters is lying. They clearly did not go to a good school. Obviously HOW you do at the school and the connections you make matter significantly for wherever you go, but the name of that school is with you forever. I thank my stars everyday that I did not apply last year. Last year I was looking at schools like Dayton and Roger William and doubting if I would get in. Now I'm deciding between schools ranked in the 80's to 70's with respectable names and the scholarships they've given me. (ok other LSD'ers, i know you would rather die than go to a school ranked 77, but we didn't all choose studying over fun in college)
The reputation of the school and the scholarships I've gotten are going to help get me out of (less) debt a whole lot faster than if I went through and applied last year. It sucks to wait a year, but do it. You'll be better off in the long run....especially when your long-run isn't as long as everybody elses. You don't have the luxury of taking 5 years to work your way up to making the big bucks. You need to go somewhere that can qualify you for a great money-making job right away.
So that's my opinion. Best of luck to you, whatever it is you choose.